The Day Ahead: Tricks, No Treats

 | Oct 31, 2011 | 8:30 AM EDT  | Comments
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In the Headlines

Traders were getting a trick rather than a treat early Monday. Index futures were retracing some of Thursday's big gains, which were held during the following session.

As is frequently the case these days, U.S. stock futures were following Europe, where stocks were showing significant losses. One of today's concerns is debt contagion spreading to Italy, where the yield on the 10-year note was above 6% early Monday.

The initial celebration over last week's announcement about a European debt plan has been tempered by reality that many details remain to be worked out.

Asian stocks also skidded Monday as traders grabbed profits as they awaited more specifics from Europe. The Bank of Japan, known for its propensity to intervene in its currency market, did just that on Monday. It began unloading yen in the foreign exchange markets today, which, of course, resulted in the currency moving lower vs. the dollar and the euro.

Commodities Corner

Gold slumped $3.70 early Monday, to $1,743.50 an ounce.

Crude oil was up $0.17 in early Nymex trade, to $93.49 per barrel.

Economic Docket

With a new month getting under way this week, there is a busy earnings calendar, although it ramps up slowly. Today brings just one significant report, the October Chicago Purchasing Managers Index from economic researcher Kingsbury International.

The gauge of manufacturing activity in the Windy City region is expected to edge slightly downward, to 60, from last month's reading of 60.4. Traders have tended to view this report as a precursor to the Institute for Supply Management's national manufacturing survey, which is released in the following session.

Earnings News

In earnings news, health insurer Humana (HUM) said third-quarter earnings were $2.67 per share on revenue of $9.3 billion. Analysts had foreseen income of $2.02 a share and revenue of $9.25 billion. The company raised its full-year earnings guidance.

Humana, the second-largest provider of Medicare Advantage plans, said enrollment in the program jumped 10% from the year-ago quarter.

After the bell, Anadarko Petroleum (APC) reports its third-quarter results. The company made headlines after the Gulf of Mexico oil spill last year, because it owned a 25% interest in BP's (BP) Macondo Prospect. Nonetheless, the stock ended 2010 with a gain of 22%, and is up 9.95% so far in 2011.

 

Wall Street expects Anadarko to report third-quarter income of $0.68 per share on revenue of $3.27 billion. On the conference call, analysts will be listening for updates on new discoveries off the African coast.

Early Movers

Early Monday, premarket trade of futures brokerage MF Global (MF) was halted. The company is expected to file bankruptcy and announce asset sales. CEO Jon Corzine had attempted to shift the firm's business model from brokerage to investment bank, but the company ended up on the wrong side of the trade in eurozone sovereign debt. The stock is down nearly 71% so far this month, closing Friday at $1.20.

A premarket gainer was networking gear maker and S&P 500 component Juniper Networks (JNPR), advancing $0.11, 0.44%, to $24.92 ahead of the bell. Last week, CEO Kevin Johnson said the company is pursuing acquisitions that would increase its presence in Asia. The stock was upgraded to Outperform from Sector Perform at RBC Capital. The stock has gained a whopping 43.74% in October.

A stock showing a big premarket decline was ITT (ITT). However, the 50% move was ahead of a split into three separate companies, which becomes effective later today. The defense segment will trade as ITT Excelis (XLS); the water technology unit will be Xylem (XYL); and the industrial business will retain the ITT name and ticker.

Analyst Actions

Analyst actions in the premarket included a downgrade of Newmont Mining (NEM) to Sector Underperformer from Sector Performer at CIBC. Heading into Monday's session, Newmont shares were up nearly 9% this month.

Columnist Conversations

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Lang:
i was double-delighted to see Stephanie Link bullish on LULU but also a recent piece by Ed Ponsi reflecting th...

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